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Wednesday May 27th, 2015 5:51AM

Weak job growth makes bold Fed action more likely

By Ken Stanford Reporter
WASHINGTON - U.S. employers added 96,000 jobs in August, a tepid figure that points to the economy's persistent weakness and slowing prospects for the unemployed.

The unemployment rate fell to 8.1 percent from 8.3 percent in July. But that was only because more people gave up looking for jobs. People out of work are counted as unemployed only if they're looking for a job.

The sluggish job growth could slow the momentum President Barack Obama hoped to gain from his speech Thursday night to the Democratic National Convention.

It could also make the Federal Reserve more likely to unveil a new bond-buying program at its meeting next week. The goal would be to lower long-term interest rates to encourage borrowing and spending.

Hourly pay fell in August, manufacturers cut the most jobs in two years and the number of people in the work force dropped to its lowest level in 31 years. The government also said 41,000 fewer jobs were created in July and June than first estimated.

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Here's what The Associated Press' reporters are finding:

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FED LIKELY TO ACT

Will the Federal Reserve go big next week?

Most economists say they expect the Fed to announce action to try to stimulate the economy. And many now think the Fed will make the boldest move it can - a third round of bond buying to try to lower long-term interest rates.

This is known as quantitative easing.

"If there was any lingering doubt within the Fed about announcing a new round of quantitative easing next week, this should surely push them over the edge," said Tom Porcelli, an economist at RBC.

Nigel Gault, chief U.S. economist at IHS Global Insight, thinks the Fed will focus any new purchases on mortgage-backed securities to try to lower mortgage rates and boost the fledgling housing recovery.

- Martin Crutsinger, AP Economics Writer

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SHRINKING WORK FORCE

The unemployment rate declined in August, but for a bad reason: The government doesn't count people as unemployed if they've stopped looking for a job.

The number of people working or looking for work shrank in August by 368,000, the government said. The reasons vary, economists say.

Many people, after months of looking for a job without success, give up. But this group of "discouraged" workers doesn't fully capture the phenomenon.

New parents, for example, may quit a job to focus on raising children.

An older worker who's laid off may claim Social Security benefits instead of looking for a new job.

There are also demographic shifts underlying the trend: Baby boomers are retiring. And fewer young people are entering the work force.

The result is that the percentage of working-age Americans with a job or looking for one has dropped to 63.5 percent, a 31-year low.

- Christopher S. Rugaber, AP Economics Writer

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YOUNG DROPOUTS

One reason the proportion of adults in the work force has dropped is that many younger adults have given up looking for a job. Or they never started.

The work force consists of those with a job or actively looking for one.

The proportion of people ages 16 to 24 in the workforce fell more than 1 percentage point last month to 54.1 percent. That's the lowest "participation rate" for that group in 57 years. Many are likely staying in school or returning to school, hoping for a turnaround in the job market later.

By contrast, the participation rate for workers 55 and older rose from 40.2 percent to 40.4 percent. The rate for those 25 to 54 was unchanged at 81.4 percent.

- Christopher S. Rugaber, AP Economics Writer

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WHO'S UNEMPLOYED?

When the government surveys 60,000 U.S. households each month to determine the unemployment rate, it asks a series of questions, by phone or in person. For example:

Do you own a business? Did you work for pay? If not, did you provide unpaid work for a family business or farm? (Those who did are considered employed.)

Afterward, the survey participants are asked whether they had a job and, if so, whether it was full or part time.

The government's definition of unemployed is someone who's out of work and has actively looked for a job in the past four weeks.

- Christopher S. Rugaber, AP Economics Writer

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GOVERNMENTS HURTING, NOT HELPING

In normal recoveries, government hiring helps economies rebound from recessions.

Not this time.

When you count the 7,000 public-sector jobs lost in August, governments at all levels - federal, state and local - have slashed 670,000 jobs since the recession ended in June 2009. By contrast, private companies have added 3.5 million jobs.

It's the first time since World War II that governments have shed jobs this deep into an economic recovery. At this point - three years and two months - into the nine previous postwar recoveries, government jobs had risen an average 8 percent.

This time, they're down 3 percent.

- Paul Wiseman, AP Economics Writer

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A FURLOUGHED TEACHER

Most of the government job cuts have been made by states and localities. Some Pennsylvania school districts, for example, have had to lay off teachers after the state cut subsidies to public schools by more than 10 percent.

Kayla Middleton was among them. She was one of about 70 teachers furloughed this year by the Reading School District.

Once rumors of layoffs began circulating, Middleton, 26, a fourth-grade teacher, knew her lack of seniority made her a likely target. She received a furlough notice three days before the school year ended in June.

"I was 38th from the bottom, so I knew there was no way I was escaping," she says.

- Peter Jackson, Associated Press writer

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UNEMPLOYMENT IN BATTLEGROUNDS

President Barack Obama will face voters in two months with an unemployment rate near 8 percent. But in the battleground states where the election will be decided, unemployment rates range widely.

Some such states, like Iowa, Virginia and New Hampshire, are enjoying lower-than-average unemployment. Others, like Nevada and North Carolina, are suffering more than most.

Even in states faring relatively well, job growth isn't necessarily booming. New Hampshire, for example, has one of the lowest state unemployment rates: 5.4 percent. Yet a report by forecasting firm IHS Global calls the state's economy "shaky at best" because of shrinking payrolls in manufacturing and other areas.

And in Iowa (unemployment: 5.3 percent), construction and manufacturing are doing well. But the state's economy is being hurt by this year's drought and sharp cuts in state and local government jobs.

- Alan Fram, Associated Press writer

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WORDS TO DESCRIBE THE NUMBERS

Here's what the two presidential campaigns said after the August jobs report was released:

President Barack Obama: "We know it's not good enough. We need to create more jobs, faster."

Mitt Romney: "We're going in the wrong direction."

Alan Krueger, head of Obama's Council of Economic Advisers: "While there is more work that remains to be done, today's employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression."

GOP vice presidential nominee Paul Ryan: "This is not even close to what a recovery looks like. I would argue this is the result of failed leadership in Washington, bad fiscal policy coming from the administration."

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HOW MUCH DOES IT PAY?

Numerous industries added jobs last month. But they didn't add many. And the jobs they filled weren't necessarily well-paying.

For example, one of the biggest gains was in the generally low-paying restaurant industry, which added 28,300 jobs. Another, retailing, added 6,100.

Health care expanded by 17,000 positions. This category includes both higher-paying positions, like nurses, and lower-paying ones, such as home health aides.

Manufacturing jobs, which tend to pay above-average wages, fell 15,000. It was the biggest monthly drop in two years. The mining and logging industry, which includes oil and gas drilling, shed 2,000 jobs.

Lower-paying jobs are likely to predominate when unemployment is high. That's because more of the unemployed are desperate and willing to fill those positions.

- Christopher S. Rugaber, AP Economics Writer

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RACIAL DISPARITIES

Unemployment last month varied across racial groups. And for varying reasons.

The unemployment rate for white Americans, for example, fell to 7.2 percent, from 7.4 percent. But the main reason was that more of them gave up looking for work: The percentage of whites in the work force fell to 63.7 percent, from 64 percent. (The work force consists of people with a job or actively seeking one.)

African-Americans, by contrast, generally remained in the work force. Their "participation rate" was unchanged at 61.4 percent. As a result, the unemployment rate for African-Americans was unchanged at 14.1 percent.

The unemployment rate for Hispanics dipped to 10.2 percent from 10.3 percent. And the rate for Asians, which isn't seasonally adjusted, fell to 5.9 percent from 6.2 percent.

- Christopher S. Rugaber, AP Economics Writer

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ROMNEY'S 12 MILLION JOBS

Mitt Romney is trumpeting a lofty goal: A Romney administration could create 12 million jobs in four years - an average of 250,000 a month.

Is that wildly unrealistic? After all, monthly job gains this year have averaged just 139,000.

Not everyone is dismissive.

"We lost 8 million jobs in two years," says David Wyss, an economics professor at Brown University. "We ought to be able to get 12 million back in four years."

Forecasting firm Moody's.com foresees 12 million more jobs from 2012 through 2016, regardless of who's president. Moody's assumes the economy will return to stronger growth.

That said, another recession would chill anyone's job estimates.

Ask George W. Bush.

In Bush's first four years in office, the economy lost 13,000 jobs. Over his full eight years - which began with one recession and ended with another - the gain was just 1.1 million jobs.

And then there was Bill Clinton. He presided over an expansion without any recessions. During Clinton's eight years, nearly 23 million jobs were added.

- Martin Crutsinger, AP Economics Writer

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OBAMA'S BREAK-EVEN MILESTONE

Here's a milestone that's difficult for President Barack Obama to brag about: There are 133.3 million Americans working - 261,000 short of the number when he was inaugurated in January 2009.

At this year's pace of job creation, payrolls would return to that level in October. And the job totals would be released Nov. 2 - four days before the election.

Of course, any comparison of now vs. then must take into account the huge numbers of jobs lost - and then gained - in between.

- Paul Wiseman, AP Economics Writer

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BIG HOLE TO FILL

The U.S. job market still has miles to go just to get back to where it was before the Great Recession.

The economy lost nearly 8.8 million jobs from when employment peaked in January 2008 until it bottomed in February 2010.

Including the 96,000 jobs added in August, the United States has regained fewer than 4.1 million jobs, or 46 percent of those lost jobs. Which helps explain why this is by far the feeblest recovery since World War II.
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